The review of post-18 education launched by the Prime Minister faces some knotty problems to untangle over higher education funding and student finance, but in itself adds another thread to the tapestry of changes woven around the sector, says Diana Beech, Director of Policy and Advocacy for the Higher Education Policy Institute.

Staffordshire University is aiming for significant growth in apprenticeships with the launch of £17m digital apprenticeships and skills hub that offers a model for the rest of the sector, says its Pro Vice Chancellor ( Partnerships and Region), Professor Ieuan Ellis.

HEi-think: Time for parties all to come clean on fees

As higher education leaders and analysts debate the future for undergraduate and postgraduate taught tuition fees at an event in London today, one of the speakers, Pam Tatlow, Chief Executive of the university think tank million+, says it is time for all political parties to come forward with fully costed plans for fixing problems with the fees and student finance system.

The decision by Universities UK to deploy the columns of The Times newspaper to criticise the Labour Party’s suggestion that they might lower fees, has raised more than a few political eyebrows.

The intervention by the trade body for universities also triggered much ill-informed comment with many suggesting that a reduction in fees would disadvantage poorer students.

This conclusion appeared to rely on the proposition that students from more advantaged backgrounds would be able to pay off their loans more quickly. Taken to its logical conclusion this would suggest that fee levels are of little consequence to students from disadvantaged backgrounds. In fact, students, graduates and taxpayers would all benefit in the long-term from a reduction in fees. That universities want to be fully compensated in respect of direct grant is hardly a surprise.

In our 2013 Behind the Headlines pamphlet Do the alternatives add up? , million+ and London Economics reviewed the resource flows and implications of both a reduction in fees to £6000 per year and separately, a graduate tax. We made clear that we were not in the business of favouring any one system and that Ministers would need to come clean on any adjustments to funding and repayment regimes in the event that they decided to pursue one of these options and adopted our own assumption that there should be no long-term additional cost to the Treasury.

Whatever the merits of these alternative scenarios, our pamphlet laid bare one of the myths perpetuated by supporters of the government’s reforms: there is no link between teaching quality and fees charged in the 2012 system. Those who claim otherwise and oppose a graduate tax on the basis that it would break the link with quality, are being dishonest.

Our 2013 pamphlets also made a wider and important point: the arguments put forward in favour of the 2012 higher education reforms were to a large extent based on the ‘smoke and mirrors’ rules which are applied to the government’s own accounts. The cut in the budget of the Department for Business, Innovation and Skills which is responsible for universities did not let the government off the hook. The Treasury has continued to borrow the funds required to support the system while BIS itself remains under pressure to reduce its own spending further and student debt has increased.

In parliamentary briefings to MPs in 2010, we warned that students and graduates were much less likely to repay these loans in full. Unlike BIS, our estimate of a 40p in the pound write-off of a student loan book which would inevitably balloon in size, has proved all too accurate. In April 2014, ministers finally threw in the towel and conceded that BIS was estimating the student loan write-off to be 45p in the pound.

Of course the graduate repayment system could be adjusted to reduce the write-off. An extension of the repayment period from 30 to 40 years, an increase in the interest rate applied to loans or a reduction in the repayment threshold from £21,000 to £18,000 a year would all reduce the cost to government and technically make the 2012 system more ‘affordable’. However, Liberal-Democrat ministers went to great lengths to ensure that they could describe the 2012 repayment system as more progressive than that under the previous Labour Government. Perhaps understandably they have resisted all attempts by their Coalition partners, the Conservatives, to revisit the repayment criteria.

Some will argue that universities have more freedom with a tuition fee of £9000 and that they are at less risk of Treasury interference. They have a point. However, in the short run, this could prove to be an argument of diminishing returns and the fact remains that whatever the funding regime, the Treasury always has an interest. If the Treasury continues to believe that the deregulation of numbers will allow universities which are ‘good’ to increase in size thus compensating for a standstill in the headline fee, tuition fees are unlikely to increase in the near future and at least not until 2016 at the earliest.

There are, however, wider problems with the 2012 system. All the data confirms that four year on, the participation of older and part-time students (not necessarily one and the same thing) has plummeted. In the UK, many universities had long traditions of offering courses of high academic quality and relevance to those who wanted to study later in life or on a flexible basis. Far from building-on this excellence, the 2012 reforms have proved to be the proverbial wet-blanket. There is now a real risk that these routes into higher education will go into terminal decline.

In all of this politicians found their nirvana moment in respect of postgraduate study which they now describe as the ‘new social mobility problem’. There is nothing new about it and proposals to introduce a postgraduate loan system would be even more welcome if they were not being prosecuted by the Treasury on the assumption that the scheme will be run at nil cost. Early indications suggest that this will be achieved by restricting access to those under 30, requiring graduates to repay their undergraduate and postgraduate loans concurrently (triggering an 18% repayment rate) and restricting the loan scheme to those who studied as undergraduates under the 2012 system.

Higher education is a net contributor to the economy and society. Rather than considering how little they should invest, this is the time for the political parties to be bold. They should set out in detail fully-funded policies which maximise opportunities for undergraduate and postgraduate study for people of all ages, put universities on a sustainable and secure footing, end the inefficiencies in the current student loan system and promote the role of all universities in research and innovation.